Opinion
No. CV09 502 45 43S
July 6, 2010
MEMORANDUM OF DECISION
FACTUAL BACKGROUND
The plaintiff, Wells Fargo Bank, N. A. (Wells Fargo) as trustee for the NLMI Trust Series 2005-FM1 brings a foreclosure action against the defendant, James Craig, because the defendant has failed to cure a mortgage note that is in default. The plaintiff filed a summons, complaint and return of service on April 30, 2009. In the complaint, the plaintiff alleges the following facts. At all relevant times, the defendant owned real property located at 15 Koger Road, Trumbull, Connecticut (the property). On March 31, 2005, the defendant executed and delivered a note to Fremont Investment Loan for a loan in the original principal amount of $160,000. The defendant executed and delivered a mortgage to secure the note to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Fremont Investment Loan. The mortgage was dated March 31, 2005 and recorded on April 6, 2005. The mortgage was assigned to Wells Fargo as trustee for the MLMI Trust Series 2005-FM1 by virtue of an assignment of mortgage to be recorded on the Trumbull Land Records. The plaintiff asserts that "the plaintiff, [Wells Fargo] as trustee for the MLMI Trust Series 2005-FM1, is the holder of said note and mortgage." The plaintiff has provided written notice in accordance with the note and mortgage to the defendant for the default, but the defendant has failed to cure the default. Because the note is in default, the plaintiff has elected to accelerate the balance due on the note, declare the note to be due in full and foreclose the mortgage securing the note.
The plaintiff lists the following liens or encumbrances with prior interests to the mortgage: (1) the city of Trumbull may claim an interest in the property by virtue of inchoate liens for real estate taxes on the grand lists of October 1, 2002 and thereafter; (2) the town of Trumbull claims an interest in the property by virtue of a sewer lien in the amount of $118.76 dated and recorded on January 30, 2009. There are no subsequent interests. Additionally, the plaintiff has caused a lis pendens to be recorded on the land records of the town of Trumbull, and has informed the defendant of his statutory rights.
On November 3, 2009, the defendant filed an answer and special defenses. On January 28, 2010, the plaintiff filled a motion for summary judgment (#111) and a supporting memorandum of law. The defendant filed a memorandum in opposition to the plaintiff's motion for summary judgment on April 16, 2010. Argument on the motion for summary judgment was heard on April 19, 2010.
DISCUSSION
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007). "In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact . . . [T]he moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
I. Prima Facie Case for Foreclosure
In its motion for summary judgment, the plaintiff argues that there are no genuine issues of material fact as to the defendant's liability, and that the plaintiff is entitled to judgment as a matter of law. "In a mortgage foreclosure action, [t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and that [the mortgagee has] defaulted on the note." (Internal quotation marks omitted.) Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003). Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied. See Bank of America, FSB v. Hanlon, 65 Conn.App. 577, 581, 783 A.2d 88 (2001). "[T]he admission of the truth of an allegation in a pleading is a judicial admission conclusive on the pleader . . . [The] admission in a pleading or answer is binding on the party making it, and may be viewed as a conclusive or judicial admission . . ." (Internal quotation marks omitted.) Fillion v. Hannon, 106 Conn.App. 745, 753 n. 8, 943 A.2d 528 (2008).
"All conveyances of land shall be: (1) In writing; (2) if the grantor is a natural person, subscribed, with or without a seal, by the grantor with his own hand or with his mark with his name annexed to it or by his attorney authorized for that purpose by a power executed, acknowledged and witnessed in the manner provided for conveyances or, if the grantor is a corporation, limited liability company or partnership, subscribed by a duly authorized person; (3) acknowledged by the grantor, his attorney or such duly authorized person to be his free act and deed; and (4) attested to by two witnesses with their own hands." General Statutes § 47-5(a).
The plaintiff's complaint asserts that Wells Fargo is the holder of the note and the mortgage in this foreclosure action. Attached to the complaint is a lis pendens, providing notice of the pendency of the action brought for foreclosure of the mortgage. Attached to the plaintiff's motion for summary judgment are the following: a copy of the note endorsed to Wells Fargo; the recorded mortgage; the recorded assignment; written notice of default along with an affidavit in support of the plaintiff's ownership and holder of the note and mortgage; and details of the defendant's default and failure to cure following the notice of default. In his memorandum of law in opposition to the motion for summary judgment, the defendant does not contest that he has defaulted on the mortgage, that he has not cured the default or that the plaintiff owns the note and the mortgage. Consequently, the court finds that there is no genuine issue of material fact that the plaintiff holds the note and the mortgage, or that the defendant has defaulted and failed to cure the mortgage. The court further finds that the plaintiff has submitted evidence to satisfy the conditions precedent to foreclosure. Therefore, the court finds that the plaintiff has established a prima facie case for a mortgage foreclosure.
CT Page 13919
II. Defendant's Special Defenses and the Validating Act
The defendant asserts fraud as a special defense to foreclosure as follows: (1) that the deed was voidable due to the absence of one of the witnesses at the time of the signature; (2) and that the "mortgage itself was fraudulently altered to add the name of a second witness." The defendant asserts fraud as a special defense because a witness's signature to the mortgage deed was added after the closing, and because the witness was not present at the time of the execution of the underlying mortgage deed by the defendant."When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether [a] special defense is legally sufficient before granting summary judgment." LaSalle National Bank v. Shook, Superior Court, judicial district of New London, Docket No. 549266 (July 13, 2000, Martin, J.), aff'd, 67 Conn.App. 93, 787 A.2d 32 (2001). "The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless that the plaintiff has no cause of action . . . A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both . . .
Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles." (Internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002).
"Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction . . . [O]ur courts have permitted several equitable defenses to a foreclosure action . . . Fraud is an equitable defense to a foreclosure action." (Citations omitted; internal quotation marks omitted.) Chase Manhattan Mortg. Corp. v. Machado, 83 Conn.App. 183, 187, 850 A.2d 260 (2004).
In support of his special defenses to the complaint, the defendant cites Deutsche Bank National Trust Co. v. Gue, Superior Court, judicial district of Fairfield, Docket No. CV 08 5015120 (November 5, 2008, Doherty, J.) ( 46 Conn. L. Rptr. 581) and Chase Home Finance, LLC v. Guzzetti, Superior Court, judicial district of Danbury, Docket No. CV 08 5004614 (February 3, 2009, Sommer, J.), and alleges that because attestation in this manner was fraudulent, the subject mortgage is void and unenforceable.
In its motion for summary judgment, the plaintiff argues that the defendant's special defenses are not sufficient to defeat the plaintiff's motion for summary judgment. The plaintiff further argues that the defendant's reliance on the above two cases is misplaced, because in those cases the court relied solely on the "Connecticut Validating Act, General Statutes Section 47-36aa to correct the underlying alleged defect with the witness signatures appearing on the mortgage deeds." The plaintiff argues that Deutsche Bank National Trust Co. and Chase Home Finance differ from the present matter because in those cases, the courts did not address whether the underlying mortgage deed was enforceable between the parties to the original mortgage. Rather, the plaintiff cites to cases that stand for the proposition that even if a mortgage deed is not properly witnessed and acknowledged, it is nevertheless valid as between the parties to the instrument. See Boudreau v. Wozniak, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 89 0100325 (July 31, 1990, Lewis, J.); Provident Bank v. Francis, Superior Court, judicial district of Hartford, Docket No. CV 00 0801554 (May 10, 2001, Satter, J.T.R.) [ 29 Conn. L. Rptr. 570] (explaining that [General Statutes § 47-36aa] provides that a mortgage containing a defective acknowledgment or no acknowledgment, or is attested by one witness only or by no witnesses is "as valid as if it had been executed without defect or omission . . .").
Although the plaintiff states that it does not rely on the validating act, General Statutes § 47-36aa, the validating act is cited in Provident Bank and is a relevant consideration here. The validating act provides for exceptions to standard requirements for conveyances of land, and provides that "(a) . . . Any deed, mortgage, lease, power of attorney, release, assignment or other instrument made for the purpose of conveying, leasing, mortgaging or affecting any interest in real property in this state recorded after January 1, 1997, which instrument contains any one or more of the following defects or omissions is as valid as if it had been executed without the defect or omission unless an action challenging the validity of that instrument is commenced and a notice of lis pendens is recorded in the land records of the town or towns where the instrument is recorded within two years after the instrument is recorded . . . (2) The instrument is attested by one witness only or by no witnesses." General Statutes § 47-36aa. "The purpose of the validating act . . . is to correct errors and omissions which would render the document invalid . . . There is a critical difference between a document which was not witnessed by the requisite number of witnesses and a document allegedly signed and sworn to by a person who is lying about having actually witnessed the signature of the maker of the document." Deutsche Bank National Trust Co. v. Gue, supra, 46 Conn. L. Rptr. 581.
In Provident Bank v. Francis, supra, Superior Court, Docket No. CV 00 0801554, the court addressed the application of the validating act. The defendant admitted that "he mortgaged the subject property to the plaintiff but claim[ed] in his special defense that the persons who attested to his signature and acknowledged his signature on the mortgage deed were not in the room when he signed the deed. The court found, under the validating act and based upon the fact that the action was between the original mortgagee and mortgagor, that the defendant's special defense did not defeat the mortgage foreclosure. The court cited to other Connecticut courts' findings and explained, "[A] defect in a mortgage . . . cannot be used to defeat a foreclosure action as between the original mortgagee and mortgagor . . . A mortgage deed not properly witnessed and acknowledged is nevertheless valid as between the parties to the instrument." (Citations omitted.) Provident Bank v. Francis, supra, Superior Court, Docket No. CV 00 0801554.
III. Fraud
The defendant argues that while the validating act would normally apply in such a dispute and that the conveyance would therefore be valid, the validating act does not apply in this case due to fraudulent alteration of the original mortgage. The defendant claims that "the mortgage itself was fraudulently altered to add the name of a second witness so that the mortgage would pass muster with the mortgage company that selected this attorney to complete the refinance transaction . . . [T]he fraudulent act that occurred herein tainted the entire transaction, rendering the mortgage invalid, or at very least, setting forth a defense that attacks the making or validity of the mortgage as is required under Practice Book § 17-43."
"Fraud is an equitable defense to a foreclosure action." FV-I, Inc. v. Forgey, Superior Court, judicial district of New London at Norwich, Docket No. CV 075002447 (May 22, 2008, Martin, J.). "Fraud involves deception practiced in order to induce another to act to her detriment, and which causes that detrimental action . . . The four essential elements of fraud are (1) that a false representation of fact was made; (2) that the party making the representation knew it to be false; (3) that the representation was made to induce action by the other party; and (4) that the other party did so act to her detriment." (Internal quotation marks omitted.) Carr v. Fleet Bank, 73 Conn.App. 593, 595, 812 A.2d 14 (2002).
In FV-I, Inc. v. Forgey, supra, Superior Court, Docket No. CV 07 5002447, a case in which the defendant pleaded fraud as a special defense to foreclosure, the court denied the plaintiff's motion for summary judgment because it found that the defendants presented the "necessary factual predicate for the special defenses of misrepresentation and fraud in the inducement." Although the court in that case did not provide a detailed factual summary as to the accusations of misrepresentation and fraud, the court explained that "genuine issues of material fact exist[ed] as to whether the mortgage broker/originator and/or settlement agent's actions constituted fraud; whether the lender directed or exercised control over the mortgage broker/originator thereby creating an agency relationship sufficient to impose liability for the alleged fraud; and whether the plaintiff, as assignee of the mortgage, took it subject to all defenses which might have been asserted against the assignor by participating in the alleged fraud or having reason to know of its existence." Id.
In the present case, in the defendant's memorandum in opposition to the plaintiff's motion for summary judgment, the defendant argues that it was fraudulent for the plaintiff to add the name of the second witness for the refinance transaction. The refinance transaction is not at issue at present, and is not related to the validity of the original mortgage deed. Although the signature of only one witness was included at the time of the signing of the original mortgage deed, the validating act provides that the agreement is still valid and enforceable. As to the defendant's argument that the validating act should not apply because the mortgage itself was fraudulently altered, this court considers the four elements of fraud as follows. The defendant does not argue that any false representations were made in the creation of the original mortgage deed, that the original mortgagee knew of a false statement, that a misrepresentation was made to induce the defendant sign the mortgage deed, or that the defendant suffered detriment due to a false statement. Therefore, the court finds that the facts in this case do not support the defendant's special defense of fraud with regard to the signing of the original mortgage deed. Any issues related to the refinance transaction shall be addressed at a later date, if necessary.
CONCLUSION
For the foregoing reasons, the court will grant the plaintiff's motion for summary judgment, as to liability only.